The semiconductor industry is gearing up for a resurgence in 2024, riding on a projected annual growth rate of over 20%, based on the latest insights from the International Data Corp. (IDC).
Many factors contribute to this anticipated revival including the escalating global demand for artificial intelligence (AI), high-performance computing (HPC), stable smartphone and personal computer markets, robust infrastructure needs, and sustained growth in automotive sectors form the bedrock of this optimistic outlook.
“Memory manufacturers’ strict control of supply and output has led to increasing prices from the start of November, and the demand for AI across all major applications will drive the overall semiconductor sales market to recover in 2024,” said Galen Zeng, senior research manager, Semiconductor Research, IDC Asia/Pacific.
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According to the IDC, the semiconductor market has weathered a storm of weak market demand, leading to a 20% decline in the first half of 2023. While sporadic short and rush orders emerged in the latter part of the year, the industry failed to overturn this decline, resulting in an expected 12% overall decrease in semiconductor sales for 2023.
However, the effects of reduced production leading to increased product prices, coupled with the expanding use of high-priced HBM, are poised to fuel market growth.
“The semiconductor supply chain, including design, manufacturing, packaging, and testing, will bid farewell to the downturn in 2023,” Zeng said.
Trends
The automotive sector, particularly automotive intelligence and electrification, remains resilient, with ADAS and infotainment driving significant portions of the semiconductor market. The demand for semiconductor chips in automotive electronics is set to maintain a long-term, steady trajectory, further solidifying the industry’s prospects.
AI’s significant impact is evident in the surging need for higher computing power in data centers, driving complex data processing, language models, and analytics. Anticipated integration of more AI functionalities into personal devices from 2024 onwards, including AI smartphones, PCs, and wearables, is expected to drive demand for semiconductors and advanced packaging, fostering innovative applications.
Despite sluggish performance among integrated circuit (IC) designers in the Asia Pacific due to inventory rationalization, vendors have shown resilience by investing in innovation and technology. As the global personal device market gradually rebounds, new growth opportunities are anticipated, potentially leading to a 14% annual market growth in 2024.
The foundry industry faced challenges in 2023 due to inventory corrections and weak demand. However, recovery is underway, especially in advanced processes, driven by resurging demand for consumer electronics and AI. The efforts of key players like TSMC, Samsung, and Intel, coupled with stabilizing end-user demand, are expected to propel double-digit growth in the global semiconductor foundry industry in the coming year.
The US ban has prompted China to expand its production capacity aggressively, posing pricing pressure on non-Chinese foundries. Also, short-term destocking pressures for industrial control and automotive IC inventory will persist, further straining supplier capacities and their ability to regain negotiation leverage.
Advanced packaging technologies are gaining prominence to meet evolving chip performance demands. The 2.5/3D package market is poised for a 22% CAGR from 2023 to 2028, presenting a focal point in semiconductor package testing.
AI’s surge has fueled a spike in server demand reliant on TSMC’s advanced packaging technology CoWoS. A notable supply-demand gap exists currently, with expectations of a 130% capacity increase by late 2024. This surge, along with increased vendor participation, is anticipated to fortify AI chip supply and serve as a pivotal growth catalyst for AI adoption.